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Jan. 23, 2006
Sumitomo Corporation
Sawai Pharmaceutical Co., Ltd.

Notice of third-party allocation of new shares in Medisa Shinyaku Inc., a subsidiary of Sawai Pharmaceutical, to be allocated to Sumitomo Group

The following is a notice of a basic agreement reached between Sawai Pharmaceutical Co., Ltd., Medisa Shinyaku Inc., Sumitomo Corporation and Summit Medi-Chem, Ltd. regarding the third-party allocation of new shares in Medisa Shinyaku Inc., which is a consolidated subsidiary of Sawai Pharmaceutical Co., Ltd., to be allocated to Sumitomo Corporation and Summit Medi-Chem, Ltd.

Notice

1. Purpose
Since its foundation in 1985, as a 100% subsidiary of Sawai Pharmaceutical, Medisa Shinyaku has been involved in the development and manufacture of generic drugs and has sold generic drugs not only to Sawai Pharmaceutical, but new drug manufacturers also. Promoting the use of generic drugs to lower medical costs (which, in turn, lowers the portion to be paid by patients themselves) is consistent with the government's policy of restraining medical costs. Specifically, in the case of cancer patients who require long term treatment with expensive drugs leading to costly pharmaceutical burdens, there is strong demand for generic anti-cancer drugs, which lead to the decision by Medisa Shinyaku to newly commit to the development and provision of anti-cancer specific drugs. To achieve that, a tie-up with a company with an expansive network both in Japan and overseas was judged necessary in order to promote/accelerate candidate drug introduction and development, etc.
Sumitomo Corporation and their 100% subsidiary Summit Medi-Chem, which specializes in the pharmaceutical field, in addition to having deep relations with pharmaceutical companies both in Japan and overseas, possesses a large number of seeds in medical field, and have been actively approaching an advance into the pharmaceutical manufacturing business focusing on the generic anti-cancer drug business.
Through this investment in Medisa Shinyaku by Sumitomo Corporation and Summit Medi-Chem, Ltd. via a third-party allocation of new shares, we aim to expand the current business of Medisa Shinyaku and pave the way for a smooth start in the new generic anti-cancer drug development business.

2. Outline of third-party allocation of new shares in Medisa Shinyaku Inc.